Bitcoin price has hit significant resistance at $9,500 putting the pre-halving rally in jeopardy with 10 days to go before the event.
Is this halving FOMO? Sustainable growth? All questions are arising in the recent movements, but overall a solid week for Bitcoin and crypto. What can the markets expect from here?
Crypto market daily performance. Source: Coin360
Bitcoin touches a crucial resistance level and rejects
The price of Bitcoin held the $7,600 level for support throughout the beginning of the week and momentum picked up after breaking $7,800.
The rally of Bitcoin ended at the significant resistance block between $9,200-9,500. Why did it stop there? This whole resistance zone provided support throughout the summer of 2019.
BTC USD 1-week chart. Source: TradingView
Alongside with the horizontal resistance zone, the CME futures chart showed a clear CME gap between $8,200-9,055, which closed during the given rally.
The chart is also showing support levels of $7,800 and $6,600 that could be tested if the price of Bitcoin retraces.
BTC USD 1-day chart. Source: TradingView
At the same time, the daily chart of Bitcoin is showing clear levels of support and resistance. The range has resistances at the $9,200-9,500 area, and the support levels are found at $8,200-8,400 and $7,800.
The structure is pretty straight-forward. The price was rejected hard from the $9,500 area as a $1,000 crash occurred in a matter of hours. Such a dropdown marks the confirmation of a strong resistance area with sellers clicking the sell button in this zone.
BTC USD 30-min chart. Source: TradingView
The 30-minute chart is showing a clear picture of the recent movements. Normally, I wouldn’t use these smaller time frames inside an article. However, with the recent volatility, these lower time frames can perhaps better identify a structure on the chart than the larger time frames.
Therefore, the chart is showing a clear rejection at the $9,400 area, after which a crash of $1,000 occurred. The chart shows a support area around $8,400 as the price of Bitcoin compressed there just before the big surge happened, making it a key price point that may serve as significant support.
As the chart shows, the price bounced from the $8,400 area and rallied towards $9,000. Here, the same compression occurred, which is now acting as resistance whereas $8,400 is a support level suggesting the establishment of a potential new range for the coming period.
Total market capitalization cryptocurrency touches $260 billion
Total market capitalization cryptocurrency 1-day chart. Source: TradingView
The total market capitalization shows a clear breakout above $220 billion, which triggered a rally. The resistance levels were found at $235, $246 and $260 billion. The first two levels were passed in one-go, after which the market capitalization was rejected at $260 billion.
The same structure is found here as for Bitcoin. Support levels are found at $235 and $218-220 billion, which is classified as the low of the range. The resistance levels are found at $246 and $260 billion, as these are the highs of the range. One should now expect some consolidation before any further volatility after such a breakout.
Bitcoin dominance rallying upwards going into the halving
BTC Dominance 2-day chart. Source: TradingView
Meanwhile, the Bitcoin dominance index has been rallying up the past week. That’s normal, as people are selling their altcoins to mitigate losses against the BTC pair despite gains in USD.
As the chart is showing, the dominance level is approaching a significant level. If the dominance rallies further above 67.50%, a further dropdown of the altcoins can be expected.
Is that a strange signal? No, as the Bitcoin halving is now 10 days away, the spotlight is fully on BTC. However, when the focus goes away, money should easily flow back to altcoins, giving them a chance to catch up to BTC.
The bullish scenario for Bitcoin
BTC USD 30-minute bullish chart. Source: TradingView
The bullish scenario and bearish scenarios are pretty easy to gather from the charts. For a bullish continuation, the price of Bitcoin needs to hold $8,600 (though tests of $8,400 as further range lows are possible).
Thus, a clear breakthrough of $9,000 is the next hurdle to clear — where the price of Bitcoin was rejected yesterday — and open the door for a continuation of the rally.
As the chart shows, flipping levels would be a pivotal trigger to watch for. Breaking and holding the $9,000 level for support warrants a continuation towards $9,300-9,400 and opens the road to $10,500 with enough momentum.
The bearish scenario for Bitcoin
BTC USD 30-minute bearish scenario. Source: TradingView
The bearish scenario is identical to the moves the price saw yesterday. Once the price of Bitcoin can’t break above $9,050-9,100 and doesn’t hold $9,000 support, it’s likely to expect further downwards momentum.
The key levels to watch are found at $8,200 and $8,350-8,425, as the chart shows.
Traders should also be aware of a potential “buy the rumor, sell the news” scenario for the halving of Bitcoin. For example, the price of Bitcoin peaked three weeks before the last halving and resulted in a significant crash after the halving occurred.
Similar scenarios were also seen around the halving of Litecoin (LTC), the seventh-ranked cryptocurrency by market cap. Hence, if the price of Bitcoin can’t reclaim the $9,050-9,100 area, a further retracement of Bitcoin to potentially $7,800 or lower should not come as a surprise.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.